Aurizon warns capacity cuts could get worse

Aurizon has warned its rail network customers of more changes to the way it will repair tracks that may reduce system capacity by more than the 20 million tonnes annually the operator has controversially indicated since February.

The latest warning arrived at the tail of a letter penned in the name of Aurizon Network boss Michael Riches for the increasingly angry and vindictive customers last Monday.

"We have previously advised that the net impact of initial changes to accord with the QCA's (Queensland Competition Authority) draft decision could reduce system throughput by approximately 20 million tonnes on an annualised basis and that as we continue to align our operating practices to the draft decision throughput could potentially reduce further," the coal companies were told.

In December the QCA issued a draft pricing decision that left Aurizon bitterly disappointed because the cap on income was set $1 billion shy of what the company asked for and because the regulator reduced the amount of maintenance spending it could pass on to customers by $100 million over the four-year life of the decision.

What makes that threat so worrying for the miners is that Riches went on to note that the changes to his ballast management confirmed by his letter "will not impact that previously advised estimate".

In other words, Aurizon has more big changes to make and not even its management is able yet to estimate accurately their containing effects on network capacity.

Aurizon versus Queensland coal

If Riches was trying to ease tension between network operator and customer, then his failure was total. Instead he has helped reduce a potentially three-corner contest to a war of two sides. It is now Aurizon versus everyone else in Queensland coal, from the miners to the port and train operators to the state government and its regulator.

The signatories to the letter of vigorous complaint included BHP (the world's biggest coking coal producer), Glencore (Australia's biggest coal producer) and Yancoal (China Inc's Australian coal outpost and the nation's second biggest thermal coal producer) among a list of nine companies.

Those customers accused Aurizon of failures of consultation, commercial logic and the law. They accused Aurizon management of "deliberately" withholding information about maintenance changes and their likely effects. And, after saying they had already lost revenue to the changed schedules, they announced an intention to "take all available steps" to protect their position.

Aurizon subsequently rejected it had "withheld or delayed the provision of information to customers".